Real Estate Report Card
The Pain Spreads in Real Estate
Hotels are benefiting from increased tourism, but economic conditions are hurting other sectors of the commercial market.
STRONG SHOWING: Mike Speicher isn’t surprised that Florida’s hospitality markets are strong this year. As general manager of the new Westin Imagine Orlando, he’s seen a steady flow of hotel guests for the 315-room Intrawest hotel/condominium near the Orange County Convention Center. “In our market, everyone seems to be doing well.” [Photo: Jeffrey Camp]
Hospitality: Sunshine Still Sells
GIVE AND TAKE: Tight credit will stymie hotel growth, but that will benefit existing hotels, including the renovated Foutainebleau. [Photo: Matt Dean]
The Sunshine State’s perennial appeal to leisure and business travelers has supported a modest wave of new hospitality investment throughout the state. In Miami Beach, two oceanfront landmarks — the Fontainebleau and Eden Roc — are scheduled to reopen soon after extensive renovations. Along I-95 to the north, a new Holiday Inn Express opened recently in Stuart with a Courtyard Marriott to follow later this year.
However, tighter lending standards will limit the supply of new hotels in the next few years, says Mark Lunt, principal at Ernst & Young Hospitality Services Group in Miami. “The credit crunch means there will be no surge in supply,” he says. “That will benefit existing hotels and result in higher room rates in cities like Miami, Fort Lauderdale and Orlando, which are enjoying great demand.”
Christian Charre, senior vice president at Jones Lang LaSalle in Miami, says the weakest link in the hospitality sector is the condo/hotel concept, which has declined due to the residential market standstill and general lack of investor interest. “Consumers have found there is no resale market now for their units,” he says. “Then they look at the potential rental income from the room and compare it with their expenses.”
On the other hand, Charre says affluent vacation-oriented buyers still like the fractional ownership concept — purchasing 1/8 to 1/10 of a large unit in a complex managed by Ritz-Carlton or other upscale chains. “In this case, it’s a lifestyle purchase rather than an investment. There’s a limited supply in the market, and it has a definite appeal to second-home buyers.”